Sramana Mitra: Right. I think we understand the benefits. Would you talk about how banks are doing it? What is the architecture of the solution? How does the money flow?
Diarmuid Mallon: What’s being done is that there’s a commerce platform deployed on mobile. Traditionally, when people talk about mobile banking, what they’re talking about is an app on the phone that interacts with core banking, perhaps through the ATM network. It dips into core banking and pulls out your balance or dips into core banking and perhaps looks at some pre-defined bill-pay destinations you’ve set up and allows you to send to those and, potentially, lets you send money between people. But it’s all based upon dipping into core banking and into an existing account. How do you get into those accounts? You have to be set up in core banking. All of the business processes are based on step one: a person walks into the branch.
We’ve already said that the whole point of this is we want to go beyond the branch network. We have to move everything that I’ve described into the mobile channel. What they have is a platform out there called the system of record. The system of record is the mobile commerce platform. It does the onboarding of new customers, including the KYC (know your customer) element. It maintains their accounts and profiles. If they have accounts with money in them, it can calculate interest on those accounts and interact with other financial products like micro loans or the loan system and so on. What you have is, to be incredibly simplistic, a bank in a box, but it’s a mobile-centered box.
The consumer process is that you walk to your village square, and there will be an agent from the bank who will also have a mobile phone. You’ll bring along some ID and a small amount of money to open the account. We can scan the documents because, of course, now the agent’s phone will be a high-end phone that will have a camera, so he can take a picture of the documents and store them and capture all the information. Then we create a bank record and link it to that person’s mobile phone. We don’t require that the customer have a mobile phone. We use USSD or SMS depending on where you are in the world. That works with any phone. Then, within the platform, we create an account for that person, and the funds are deposited. That is a fully working account with minimal connection back to core banking.
SM: A couple of questions. Number one is you talked about an ID. In [some parts of] South Asia, the ID process doesn’t exist. There’s no notion of a central, government-issued ID of any kind. India is, of course, doing its universal ID project, which is a massive project to address these kinds of things. But what IDs are used in Bangladesh, for instance?
DM: That’s always the challenge. There is no one way of doing it. Depending on each country, the solution will be configured to line up with whatever is required. Sometimes that requires some new regulation, but generally, it is working within the existing regulation. So, it could be an ID card, a passport, and so on.
SM: The kinds of people we’re talking about in Bangladesh, I don’t believe they have passports at all.
DM: No, there’s no passport there at all. In South Africa, we use proof of residence, which is a bill of some form … and they do have ID cards there. The way that our platform is built, it’s very flexible. A great example is we have a proof of concept where we’re already connected at our universal ID system in India. So, we can use that to authenticate someone. It’s not in production, but we’ve connected to it, and we can use one of the fingerprint scanners. We can transfer money, and you can withdraw by using your fingerprint.
SM: I think India is going in the right direction by creating a universal ID system and giving service providers APIs into that system to do exactly what you’re talking about. That really is what the initiative is about, making these people legitimate and be able to use services like banking, micro loans, and other entitlement benefits and so on.
DM: It is. Something that I think is very neat is that the person sending money needs a phone, but the person withdrawing it doesn’t. He just needs to go to a store or agent who has a scanner. So, you can actually make mobile banking work beyond people who have mobile devices.